Serious Questions Over Making Tax Digital: Will HMRC Ever Be Able to Deliver?

There are serious questions over the future viability of Making Tax Digital (MTD) following yesterday’s announcement that it will be delayed by two years to April 2026, says leading tax and advisory firm Blick Rothenberg.

Nimesh Shah, CEO of the firm, said: ”It is over 10 years since George Osborne announced the original digital transformation project in 2015.  There are now serious questions about whether it serves the intended goal of offering taxpayers a digital gateway to their taxes and HMRC enhances efficiencies and reduces compliance.”

He added: “The MTD project has consistency stalled, with HMRC having to contend with a burgeoning tax code and the digitisation agenda not being able to keep pace.”

Nimesh said: “The latest announcement goes beyond a simple extension, with the minimum threshold level being increased to £50,000 and a phased introduction for landlords/sole traders earning more than £30,000 from April 2027. I wouldn’t be surprised if businesses generating less than £50,000 are removed from MTD nearer April 2027.”

He added: “The extension and increase to the minimum threshold is good news for hundreds of small businesses facing a significantly higher compliance burden – but why has it taken HMRC so long to get to this inevitable point? MTD was always going to be challenging for businesses because it introduced a greater compliance burden. Businesses have been left largely in the dark about how they were expected to satisfy the requirements given HMRC delays.”

Nimesh said: “Nevertheless, small businesses will be relieved that the significant changes planned for April 2024 are delayed for at least two years. However, small businesses will wonder if MTD will ever land and, if so, in what form. I believe there is a serious loss of credibility in HMRC to deliver their digital mandate.”